‘We’re Making More Money Importing Tyres Than Manufacturing In Nigeria’

Photo: Nnamdi Nwokedi, Director, Michelin Tyre Services Nigeria

INTERVIEW –Nnamdi Nwokedi is the director of Michelin Tyre Services Nigeria and the chief executive officer of Vox Populi, a political action group. In this interview with Damilola Daniel, he lets out what would make his company return to manufacturing again and the way forward for the Nigerian economy.

What would you say led to the ‘death’ of tyre manufacturing in Nigeria?
First of all, it is a shame that a country as large and dynamic as Nigeria would be importing tyres. We should have a number of tyre manufacturing companies in Nigeria because of how vital the transportation industry is in any economy, especially in a third-world economy. A lot of the things that we do which we don’t have high technology for are dependent of transportation. Even those countries with high-tech that conducts businesses over the internet, transportation still plays a vital role in their economies.

Take a company like Michelin for instance, we came to Nigeria in 1960 but had to close our factory in the country four years ago, located in Port Harcourt, because of the prevailing situations in the economy; laying off thousands of workers. You have a country where infrastructure is almost non-existence. We produce tyres using diesel. Even when NEPA (PHCN) gives us power, the quality of the power is not good because of the fluctuating nature which could jeopardise an entire production process. So even when there is power, we had to use our generator to give us quality and stable electricity to be able to produce a very high quality tyres.

However, there is no way that a country like Nigeria will not eventually have companies set up tyre manufacturing plants because the country is versed. The number of cars, trucks and vans keep increasing every year and we cannot satisfy that market through importation. It’s really not practical.

Was energy the only reason why Michelin closed factory?
While we were dealing with the energy situation, we had other crisis to deal with. Some of the raw materials we needed to produce tyres were stocked at the port due to massive congestion. We had a situation where hundreds of our containers were trapped. At a point we had to start diverting the containers to other ports within the region that is quite a few miles from the central of south, and the roads were very bad.

The straw that broke the camel’s back was the Niger-Delta unrest because they started kidnapping foreigners. We had to close down because we can’t negotiate with that. We had a large expatriate community in Port Harcourt and we can’t afford to have them kidnapped or have them live in fear of their families being kidnapped. So Michelin only import tyres to Nigeria for now because we have about 110 factories in about 70 countries in the World.

Since you now import tyres, are they designed for Nigerian roads?
Michelin tyres used here are actually designed for Nigerian roads. Our engineers take the nature of our roads into cognizance before they produce tyres for Nigeria. Michelin makes tyres for tough terrains, temperate and tropical countries. Some of the American’s aircrafts even use Michelin tyres. The tyres that Michelin manufacture for African countries are tyres that have been researched for decades. We have ‘cool runner’ tyres for trucks and ‘energy saver’ tyres cars.

However, bad roads destroy tyres because the longevity of a tyre depends on the roads you use it on. It’s very difficult to quantify the enormous amount of money that is wasted on tyres and other motor parts because of the bad state of our roads.

What has the profit been like when you compare manufacturing locally and importing?
To be very honest with you, we are making more money now because we don’t have all those overheads any more. Manufacturing generates a lot of overheads, even though it is desirable to do so for many reasons; such as the economy of the country you’re in, employment opportunities, public relation effects and the multiplier effect of generating jobs.

But the fact is that when you only have to concern yourself with bring-in-and-sell, then you don’t have all those other overheads to worry about. It was even more expensive manufacturing locally because we had to deal with the cost of energy and the logistics involved in supplying the materials that you need for production.

Basically, there is nothing that has hurt Nigeria more that energy. For any country to be successful and wealthy, of the entire infrastructure that you need, energy is the most important because that is what will enable people to build factories. If you want to generate wealth in a country, it is through manufacturing, and the backbone of manufacturing is energy; supported by other infrastructural developments.

Since you make more profit from importation, would Michelin be ready to come back if power becomes stable?
Nothing is impossible. Nigeria is the most important market in Africa and one of the most important emerging markets in the world. There is no question about that. The problem with Nigeria has always been bad governance. Look at what happened with the telecom industry. MTN came to Nigeria and it’s doing well. Those who were reluctant to come are regretting it now. Some of them have come back but at greater cost.

There is no way Michelin will stand by and let other manufacturers come here and start manufacturing tyres and take the market. We won’t let that happen. If the environment is the right economic system, I am sure that the company will come in and re-start its factory.

The challenge in Nigeria is that the problem we have is multifarious. First, we have the issue of corruption. The level of corruption is the major determinant of the success of a government because it will determine how much work the government can effectively deliver to the people.

The task for this government should be to cut down on the massive corruption and put an enabling environment for investment to thrive because investors across the world are constantly looking for places where they can make money. Government doesn’t need to talk much to woo investors; just show them the enabling environment and investors will come.

It is entrepreneurs that generate wealth for a nation not the government. The role of government is to create the environment and a level playing ground for all.

What do you see as the future of the Nigerian economy?
The future of any economy is dependent upon the sacrifice that the government is willing to take. With the wealth of abundance of human and natural resources that we have in Nigeria, there has to be a synergy between our attitude and what we have. If the government is willing to create an environment that will enable people to put their minds to work, Nigeria will emerge as one of the strongest economies in the world.

The federal government also needs to devour power to other states in order to balance up because the federal government is currently too powerful. Almost everything right now is dependent of the federal government and the budget it will release, and that gives the president enormous power. The fate of the whole country is dependent on one man which shouldn’t be.

Finally, we need security of lives and properties. The issue of Boko Haram must be quickly addressed. Security and energy are the most important aspect of an enabling environment to create a brighter future for Nigeria.

 

This article was first published in (the defunct) NEXT Newspaper.

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